Despite the modest weakness in the long-bond, that so many herald as the next coming of the Great Rotation meme, it would appear that the longer-end of the Treasury bond term-structure actually flattened quite notably since the start of the year. Whether this bear-flattening reflects less extreme long-term concern of hyperinflation (small odds but high impact at long-end), mid-curve-based hedging (January was a massive IG issuance month and MBS convexity concerns are growing), or lower long-term growth/inflation expectations is unclear. But given the Fed's foot on the throat of the short-to-medium-term Treasury term-structure, the longer-end remains a marginally 'free' market and based on the chart below implies equities are well ahead of themselves as we draw a line under January 2013.

The alternate view is of course that 30Y bond yields should decompress another 10-15bps relative to 10Y - which would take us back to the same steepness prior to the debt-ceiling debacle in August 2011.